“The resumption of military action after failed peace talks with the Nepalese government in August 2004 increased the pressure on the ‘Maoists’ to develop new sources of income. Paradoxically, it appears that the Chinese authorities’ efforts to make traditional Tibetan medicine one of the TAR’s ‘staple industries’ have pointed the Nepalese rebels to a potentially lucrative resource. The increased demand for plants and other ingredients used in the manufacturing of Tibetan traditional medicine, some of which are rare or even protected by international conservation conventions, has boosted smuggling from the mountainous regions of Nepal where both the practice and many of the raw materials for traditional Tibetan medicine are widespread. An especially high demand exists for caterpillar fungus, known scientifically as cordyceps sinensis and in Tibetan as yartsa gumbu. Yartsa gumbu is made into a powerful tonic said to increase one’s vigour, endurance and libido. The harvesting of cordyceps is, particularly in eastern Tibet, a very popular secondary source of income for rural Tibetans. But despite intensive collection there, market demand for cordyceps/yartsa gumbu seems to exceed the PRC’s domestic supply. In Lhasa, one kilogram of cordyceps ranges from 10,000 to more than 30,000 yuan [UKÂ£666-Â£1,999; US$1,207-$3,622; EURÂ€970-Â€2,915] This has induced rural Nepalese in western Nepal to collect cordyceps, as well as other medicinal ingredients, and sell them across the border in the TAR.

Rather than collecting cordyceps themselves, the Nepalese rebels are known to ‘allot’ certain territories under their control to groups or individuals in exchange for payments. They also either levy fees on collected cordyceps brought clandestinely to Tibet or even organise the trafficking of the fungi themselves. With the money earned, the rebels then buy weapons on the clandestine Chinese market and other supplies across the Tibetan border and bring them back to Nepal where they are used to continue the insurrection. The Nepalese Kantipur Post of 22 September 2004 estimates that the Maoists are reported to have thus earned “millions of rupees” with the trade of cordyceps and other medicinal herbs to Tibet. However, the basis for this estimation is not known.

With the aim of undermining the Maoists’ trans-border activities, the Nepalese Defence Ministry reportedly requested the Ministry of Forests and Soil Conservation to “regulate” the collection, use and trade of cordyceps. The outcome of this request however appears questionable since the Nepalese government and its representatives have long lost de facto control of complete regions in western Nepal, and the rebels have established their own regulative structures. “